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09. Jul
2012
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The other category of indicators is the leading indicator. Leading indicators are best used in markets which are reaching the end of a trend or are in a sideways momentum with little trend displayed. A leading indicator will attempt to identify a significant turning point in the market, hence their name leading. Many analysts use leading indicators to attempt to predict a change in the market/security direction and take action accordingly. As a result these types of indicators are generally used to indicate the overbought/oversold status of a security/market and the degree to which it is overbought/oversold.
